Sunday, September 21, 2008

This is isn't France!

"Somethign is rotten in the state of Denmark"
Hamlet, Act I, Scene 4.
Clearly this is the perfect phrase for this week's events:

In their bold response to the deepening financial trauma, the Federal Reserve and U.S. Treasury Department appear to have tossed aside the playbook that guided official thinking on the economy for three decades. (USA Today)

And not everybody is happy :
Former White House economist Nouriel Roubini, who forecast the current financial storm two years ago, has a harsher verdict.
He says the USA is turning into "the United Socialist State Republic of America."

Sen. Jim Bunning, R-Ky., describing himself as "outraged" by the Fed's assertiveness, sounded a similar theme: "The only difference between what the Fed did and what Hugo Chávez is doing in Venezuela is Chávez doesn't put taxpayer dollars at risk when he takes over companies. He just takes them." (USA Today)
So is the United States becoming more like .... France?

Feel reassured. According to Kenneth Rogoff, former IMF chief economist:
"The government has no intention of running AIG for the next 20 years. This isn't France. This is temporary!"
No, it isn't a "socialist" country, here in the US, you only socialize losses, not profits. Phew! For a moment I thought the taxpayer - I mean the "government" - would even keep some potential profits made by the hard working CEOs.


Imagine how well this will play outside the U.S. especially in Mexico, Thailand, South Korea, Indonesia, Russia, Brazil or Argentina which all had to go through major economic crisis - even if thay had different origins, there is some unbearable cruel irony in the current situation :

As the U.S. confronts its day of reckoning, the gap between the economic remedies it urged on others and its own actions are glaring. (USA Today)
The government may be right in acting but Americans need to learn their lesson from this : let the government supervise and regulate financial institutions and learn some humility with regards to the plight of others.

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